INVESTOR interest in wellness real estate is steadily on the rise and South-east Asia offers significant opportunities within its health and wellness industries, said a report by CapitaLand Investment (CLI).
Amid a global boom in the wellness economy, the region’s wellness and healthcare real estate sector is poised for further growth, according to the report, titled A Well of Opportunities: Wellness and Healthcare in Southeast Asia.
“South-east Asia is uniquely positioned to capitalise on the global embrace of health and wellness as a lifestyle priority, making it a prime hub for wellness, innovation and investment,” said the report.
The appeal is “especially compelling” in Singapore, Malaysia and Thailand, where various wellness and healthcare-related opportunities in the real estate sector are “evolving rapidly”, said CLI.
“This presents unique opportunities for investors to create long-term, sustainable investments that capitalise on changing demographics, and the growing demand for wellness and healthcare,” said the report.
A convergence of “economic and demographic tailwinds” have also primed the region to tap opportunities from the wellness economy’s boom, it said.
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Patricia Goh, CLI chief executive of South-east Asia Investment, said: “The wellness and healthcare sector in South-east Asia (is) driven by strong growth fundamentals such as an ageing population, rising disposable incomes and increasing medical tourism.”
Global wellness boom draws investor interest
Post-pandemic, the wellness economy has had remarkable growth as Covid-19 renewed focus on health, the report found.
“Consumers have emerged with heightened awareness, sensitivity and commitment to health and wellness,” it said.
In tandem with this trend is the global wellness real estate market’s rapid growth. Between 2020 and 2023, the sector swelled 59.9 per cent from US$274 billion to US$438 billion at a 16.9 per cent compound annual growth rate (CAGR), and it is forecast to hit US$913 billion by 2028, according to CLI.
Noting the sector’s heightened investor interest, the report said: “Investors are increasingly attracted to wellness real estate that incorporates elements of living and healthcare, such as apartments, hotels, senior living developments and medical use facilities.”
“Since 2014, the contribution of these assets to the total real estate transaction volume has been growing across regions, compared with other commercial asset classes,” it said.
To capitalise on the growing market, CLI launched the CapitaLand Wellness Fund in 2023. With a committed capital of S$350 million, the fund focuses on investments across the healthcare, medical, wellness and preventive care spectrum.
CLI’s first wellness and healthcare-related fund in South-east Asia, it has a 50 per cent interest in lyf Bugis Singapore, a freehold lodging property that incorporates various wellness programmes.
South-east Asia offers “untapped potential”
As one of Asia-Pacific’s fastest-growing wellness real estate markets, South-east Asia “offers substantial untapped potential, especially given its relatively nascent state compared to other markets”, said the report.
To accommodate the region’s growing appetite for wellness and healthcare services, prominent operators are looking to scale their operations through strategic partnerships, infrastructure investments, and mergers and acquisitions.
“These trends present attractive investment opportunities in wellness and healthcare-related real estate, where real estate asset owners typically entrust the operation of their assets to established and reputable healthcare or wellness operators,” the report said.
Driving South-east Asia’s wellness boom are its rising affluence, ageing population, and emerging status as a medical tourism destination, the report said.
Goh said: “These factors are contributing to a significant shift in consumer priorities toward personal well-being, creating significant opportunities in the wellness and healthcare market.”
Driven by falling birth rates and rising life expectancies, the population of South-east Asia that is aged 65 and above is forecast to rise by 32.7 million from 2023 to 2035, by which it could reach 11.6 per cent.
“This demographic shift is spurring a ‘longevity economy’, creating higher demand for health and wellness services, preventive and diagnostic medicine, and senior housing facilities,” the report said.
Singapore and Thailand are set to see the most pronounced effects, it added. By 2035, Singapore’s population aged 65 and above is set to reach 26.5 per cent, while that figure for Thailand is 22.8 per cent.
Growing wealth across South-east Asia is fuelling its wellness boom as well. By 2035, economic expansion of the region could outpace that of major economies such as the US, Europe, and the wider Asia-Pacific region, the report said.
Forecasts place South-east Asia’s average gross domestic product growth rate at 4.3 per cent from 2024 to 2035, above that of Asia-Pacific, the US, Europe and the global rate of 2.5 per cent.
Per capita disposable income of the region’s households is projected to grow at a CAGR of 4 per cent between 2023 and 2035, surpassing that of developed countries in Asia-Pacific and globally.
In line with economic expansion, consumer healthcare spending is poised to more than double from US$92 billion in 2023 to US$234 billion by 2035, said Goh.
The report said that “rising affluence is driving a heightened focus on wellness and healthcare, with consumers prioritising preventive care, fitness, and quality of life with the goal of improving their health and wellness”.
Medical tourism and the region’s emergence as a hub for this sector is yet another trend driving growth in South-east Asia’s wellness and healthcare real estate sector.
“While the domestic client base for healthcare-oriented and wellness services is growing rapidly across South-east Asia, international consumers are increasingly becoming a substantial part of the mix,” the report said.
The region’s climate, culture and “relatively lower service sector costs” make it appealing as a medical tourism destination.
“Health screening and diagnostic services, as well as procedures ranging from cosmetic surgery, dental care to speciality treatments and surgeries are widely sought after in the region,” the report said.
Countries have developed reputations for excellence in different fields, it noted. For instance, Thailand is known for cosmetic and reconstructive surgeries, Malaysia for dentistry and fertility treatments, and Singapore for services related to oncology, ophthalmology and neurology.
